According to the Mrcool franchise agreement, what is the purpose of mediation?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) Non-Binding Mediation – Franchisee and Franchisor agree that before either party may bring any action, dispute and/or controversy arising from or related to this Agreement and/or the franchise relationship between Franchisor and Franchisee in arbitration, the parties must first mediate the dispute through non-binding mediation. Mediation shall be non-binding and shall be conducted by the American Arbitration Association ("AAA") in accordance with the AAA's then current rules for the mediation of commercial disputes. All mediation proceedings shall be conducted in Graves County, Kentucky or, if a mediator is not available in Graves County, Kentucky then at a suitable location selected by the mediator that is located closest to Graves County, Kentucky. Mediation shall be conducted by one mediator and if Franchisor and Franchisee cannot agree on a mediator then the mediator shall be selected by the AAA. Mediation shall be conducted within 45 days of the AAA's designation and/or acknowledgment of the selected mediator or such longer period as may be agreed to between Franchisor and Franchisee in writing signed by each respective party. Franchisor and Franchisee shall each be responsible for their own costs associated with mediation and Franchisor and Franchisee shall each be responsible for and shall each pay 50% of the mediator's fee and the AAA's mediation fees.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, before either party can initiate arbitration regarding any dispute related to the Franchise Agreement or the franchise relationship, both Mrcool and the franchisee must first attempt to resolve the issue through non-binding mediation. This initial step is designed to facilitate a resolution outside of a formal arbitration setting. The mediation process is to be conducted by the American Arbitration Association (AAA), following its established rules for commercial dispute mediation.
The mediation proceedings for Mrcool are to take place in Graves County, Kentucky. If a mediator is unavailable in Graves County, the mediation will occur at a location selected by the AAA mediator that is nearest to Graves County. A single mediator will preside over the mediation, and if Mrcool and the franchisee cannot agree on a mediator, the AAA will appoint one. The mediation must be scheduled and conducted within 45 days of the AAA's mediator designation, unless both parties agree to a longer timeframe in writing.
Both Mrcool and the franchisee are responsible for covering their own costs associated with the mediation. Additionally, they will each bear 50% of the mediator's fee and the AAA's mediation fees. This requirement ensures that both parties have a financial stake in the mediation process, encouraging them to actively participate and seek a mutually agreeable resolution. This is a fairly standard practice in franchising, as mediation is often seen as a more cost-effective and less adversarial way to resolve disputes compared to arbitration or litigation.